Elevated inflation across food categories in which imports are restricted was once again the main culprit, while the moderation of seasonal deflation in vegetables was also not supportive. So far, it looks that the pass-through from the import ban has been faster than we initially thought. If confirmed in the coming weeks, that would imply that the peak of food inflation (and headline, unless indirect taxes are increased starting next year) might already be reached at the end of this year, rather than in 1Q15 as we imagined at first. That would affect the quarterly profile of our inflation forecasts, but not the overall magnitude of the inflationary impact from the food import restrictions. From the policy perspective, accelerating inflation increases the chances of an interest rate hike this Friday, although we would note that the final decision on the tax policy for next year (which might be taken today) would also be an important consideration for policy-makers.
According to our calculations, as of 8 September annual inflation had edged up a notch to 7.7%, and for full-September we believe that inflation might reach 0.4% MoM (which translates into 7.7-7.8% YoY).